The top U.S. commodity-futures market regulator said Friday that he has asked his staff to develop "reform options" for domestic aluminum markets, including U.S. futures contracts.
Commodity Futures Trading Commission Chairman Michael Selig made his comments to a beer-industry gathering in Washington, D.C. as President Trump's 50% aluminum tariff has pushed the domestic benchmark to a record premium over global prices. The Midwest Premium, calculated by S&P Global Energy's Platts, has lately added more than 75% to the price set by traders in London's metals trading pits.
"The concern is that American manufacturers, including our beer producers here, can face prices incorporating costs that don't actually reflect supply chains through a benchmark structure poorly aligned with U.S. physical metals markets," Selig said.
The daily Midwest Premium price assessment is based on actual sales and reflects the cost of supplying aluminum to the U.S., a Platts spokeman said, adding that the methodology is publicly available and has been rigorously tested.
The CFTC doesn't set commodity prices, but it is exploring the potential for U.S.-based futures contracts tied to physical delivery for both primary and recycled aluminum, Selig said.
Though primary aluminum production has dwindled in the U.S. because of relatively high energy costs, aluminum recycling facilities, which require far less electricity than smelters, have proliferated.
"One of my goals is to strengthen this derivatives market by working closely with various stakeholders to develop a derivatives market structure specifically for recycled aluminum," Selig said.